Artificial Intelligence is riding the hype curve, again! Pervasive digitization and connectivity, advances in processing power and low-cost storage are making possible what once could only be imagined. AI is penetrating every aspect of business with organizations seeking to build knowledge from data to gain competitive edge, sway customers and increase profits. This created high demand for AI expertise, tools and solutions as organizations ponder their AI strategy. But what to do about AI? How to build an investment thesis based on facts?
At Xona Partners, we have been engaged in artificial intelligence research since the mid-1990’s. In recent years, we have helped organizations develop their AI strategy and solutions, and investors in due diligence and deal flow sourcing. We distilled our observations on AI M&As into 5 fact that technology investors must consider when making investments in this space. This applies to technology companies looking to develop or acquire AI-based solutions, or financial investors looking to make investments in AI startups. The following 5 facts will help guide their strategy: Continue reading
We’re mid-way through 2017. That’s only 8 months from the Pyeongchang winter olympics – supposedly a poster for 5G technology [Link2]. Obviously, true, commercial 5G will not happen in 8 months, but the hype machine will kick into increasingly higher gears. Hence, I thought to put together a few thoughts on the state of the market and highlight what I foresee as a potential problem the market may come to face in light of how 5G is evolving: the cascading technology trap. The consequences of this challenge is to delay the deployments of 5G beyond the current estimates of analysts and industry players. Continue reading
Edge computing has been attracting a lot of interest lately. The reasons are many, not the least is the potential for service providers to create and monetize new services and applications. I recently chaired a panel on MEC at the Layer123 NFV Congress 2017 in San Jose. In speaking with different ecosystem players, I noted a few misconceptions related to edge computing: Continue reading
This past week saw Verizon overtaking AT&T in bidding for Straight Path Communications, owner of 28 and 39 GHz ‘5G’ spectrum, closing the contest at $3.1 Billion, more than double AT&T’s initial bid of $1.25 Billion ($1.6 B transaction value). The acquisition is framed within the context of spectrum for 5G services. What makes this an interesting case is that it comes at a time when both carriers did not play actively in the 600 MHz auction with Verizon not bidding at all, and AT&T spending just over $900 million in the $19.8 Billion auction. So, is this a rational acquisition? Continue reading and take the poll at the end of the article! Continue reading
One clear trend in wireless is the increasing level of network complexity and the corresponding rise in operating expenses. Networks support three or four technologies (e.g. GSM, 3G, LTE, Wi-Fi). A proliferation of frequency bands ranging between 600 MHz and 3500 MHz lead to different service performance. There are many different types of base stations such as macro cells and small cells. More networks are planned in the mix such as 5G, LAA and MuLTEfire. A nightmare scenario is developing for network operators who have to maintain these networks and meet target performance level. Operating expenses are increasing at a time when revenues are stalled. This depressed EBITDA margins into 20% range for some service providers from a level that ranged between 40-50% only a few years ago! Could Artificial Intelligence (AI) be the answer to conundrum? Continue reading
Two days at TMT Finance M&A Forum in London were an excellent forum to get the perspective of the business community on developments in telecom, media and technology space. For me, it was the perfect opportunity to hear the CFOs’ view points on many topics that occupy CTOs – anything from evolution of technologies in the telecom and data center space to emerging technologies such as virtual and augmented reality and artificial intelligence. After many candid discussions, I wanted to note a few observations: Continue reading
Cloud RAN has reached the peak of the hype cycle, but I don’t expect the buzz to fade soon.
My recent discussions at MWC2017 with many solution architects, vendors and service providers convinced me that Cloud RAN is foggy! This is because marketeers intent on capitalizing on the ‘Cloud’ trend took over the Cloud RAN concept.
What started as a concept for centralizing and virtuzlizing radio access baseband engines, now denotes many different architectures, even those that have nothing to do with baseband centralization and virtualization. Continue reading
Bidding on the 600 MHz ‘incentive band’ stopped at $19.63 billion. The assignment phase now in progress to decide on specific allotments. Detailed results will be announced a few weeks after that concludes. Verizon, AT&T, T-Mobile, Dish and Comcast are among the bidders with Sprint a notable absentee. It will be a few short years before this new spectrum enters service. Continue reading
This year marked a coalescence* around the 28 GH band for 5G fixed access services. A year ago at MWC 2016**, different millimeter wave bands (mmWave) were still in play including the 70 GHz range. I recall discussing the performance of those solutions with exhibitors. They all claimed that mmWave access works in non-line-of-sight conditions. I even recall one the demos had a node behind a wall to make that point. The wall turned out to be made of cloth! Continue reading
There’s not event like Mobile World Congress for gauging the pulse of the industry: 108,000 visitors and over 2,300 exhibitors provide the right platform for that. As I participated with other partners at Xona Partners in drafting our observations from MWC, I wanted to share a few notes and thoughts: Continue reading
It’s only a week or so for MWC to opens. The biggest telecom event in the globe continues to grow, challenging companies to get their message heard. Press releases are no-longer effective. Day 0 – Sunday before the show – is now a full event day. But even that is not enough, leading major corporations host to analysts and opinion leaders in pre-MWC events. So with this background, I wanted to share a few thoughts! Continue reading
Multiple IoT technologies are competing for dominance with no one solution fits all applications. Rather, application requirements, regulatory, and deployment constraints will favor one technology solution over another. This makes it imperative for IoT service providers, vendors and investors to make sound and knowledgeable technology and business model choices. To help in strategic decision making, we at Xona have developed a business and technology simulation software based on several years of providing advisory services in this space. The simulator will help crystallize the opportunity, warn of potential weaknesses and pose important questions to answer. Continue reading
As the year winds down, I wanted to share a few brief notes and observations. In short, I view 2016 as a ‘transitional’ year. This transition will unfold unfold over multiple years. It will see new technologies and business models rising while others fading away. Some highlights based on what we at Xona Partners have been involved in: Continue reading
Network slicing is a focal feature of 5G networks – a savior for service providers that will enable greater control of the quality of service delivered to clients, especially the enterprise market. But while the discussion address the technical aspects of network slicing, there are many business and financial issues that remain mysterious! Continue reading
Will there be 550 million 5G subscribers in 2022 as Ericsson forecasts in its latest mobility report? I highly doubt it – here’s why.
LTE is a very successful technology that commercially began to roll out in the US, Japan and Korea in 2010 timeframe. Today, it includes over 520 live networks and over 1.3 billion subscribers (1.7 b per Ericsson’s report), recording 100% growth in one year. The reasons for fast adoption of LTE comes down to:
- Validation of data services stimulated by the iPhone launch in 2007; before this date, the ‘killer app’ was still missing.
- Need for US, Korean and Japanese operators such as Verizon, Sprint, KDDI, SKT, and LG for a new technology to get off CDMA/EV-DO.
- Availability of new spectrum such as the 700 MHz digital dividend band, 2.3 and 2.5 GHz bands.
- 3G is a poor technology for handling data services; LTE at least doubled the spectral efficiency of 3G.
Looking at these factors, the case for having a 5G technology reaching 550 m subscribers becomes challenging because:
- LTE has a rich roadmap to enhance its performance which makes the business case for 5G more challenging forcing carriers to look for new, yet unvalidated, applications to drive revenue.
- The need for 5G framed around capacity is not alone a sufficient incentive to deploy. In fact, 5G will provide small advantage over LTE in terms of spectral efficiency.
- The spectrum situation is tighter today than 5-10 years ago when large swaths were becoming available. Spectrum in sub 6 GHz is more limited and new spectrum will take longer to reach the market. Little harmonization exist among major player and trends point towards new ways of awarding and using spectrum.
- The standards for 5G are expected to finalize in 2018 (phase 1) and end of 2019 (Phase 2). Adding the time required for availability of commercial solutions, testing, certification, etc. it takes on average 2 additional years for commercial launch. LTE standard, for example, was first released in 2008 while commercial deployments started in 2010/2011.
Mobile subscriptions per technology [Source: Ericsson, November 2016]
Considering that much of India, Africa and Latin America still need to get on LTE, in addition to emerging opportunities such as private networks, there is an argument that the growth of LTE may be longer than expected as 2G and 3G networks are turned off in favor of LTE.